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30.8 Audit Requirements: When Audits Are Mandatory

Overview​

Luxembourg has specific requirements for statutory audits of annual accounts. Not all companies are required to have their accounts audited—the requirement depends on company size, legal form, and other factors. Understanding when audits are mandatory is essential for compliance.

Mandatory Audit Requirements​

Company Size Thresholds​

Audit is Mandatory for companies that exceed two of the following three criteria for two consecutive years:

  1. Balance Sheet Total: €4,400,000
  2. Net Turnover: €8,800,000
  3. Average Number of Employees: 50

Example:

  • Company with balance sheet of €5,000,000 and turnover of €9,000,000 (exceeds 2 criteria)
  • Audit required (even if employees < 50)

Certain legal forms always require audit:

  • SA (Société Anonyme): Always requires audit
  • SCA (Société en Commandite par Actions): Always requires audit
  • SEL (Société d'Économie Mixte): Always requires audit

Other forms (Sàrl, SNC, SCS) require audit only if size thresholds are exceeded.

Exemptions from Audit​

Small Company Exemption​

Small companies (not exceeding 2 of 3 criteria) are exempt from audit if they are:

  • Sàrl (Private Limited Company): Exempt if small
  • SNC (General Partnership): Exempt if small
  • SCS (Limited Partnership): Exempt if small

Micro-Company Exemption​

Micro-companies (very small companies) may be exempt from certain requirements, but audit exemption still depends on legal form.

Audit Process​

Auditor Appointment​

Certified Auditor (Réviseur d'Entreprises Agréé):

  • Must be appointed by general meeting (for SA, SCA)
  • Must be certified by Luxembourg authorities
  • Must be independent
  • Must have appropriate qualifications

Audit Scope​

Audit Includes:

  • Examination of accounting records
  • Verification of financial statements
  • Assessment of internal controls
  • Compliance with accounting standards
  • True and fair view assessment

Audit Report​

Audit Report Must Include:

  • Opinion on financial statements
  • Assessment of compliance
  • Any qualifications or reservations
  • Recommendations (if applicable)

Audit Timeline​

Timing Requirements​

Audit Must Be Completed:

  • Before general meeting approval (for SA, SCA)
  • Before filing with RCS
  • Within 6 months of fiscal year end (for approval)
  • Within 7 months of fiscal year end (for filing)

Coordination​

Process:

  1. Fiscal year ends
  2. Annual accounts prepared
  3. Accounts audited (if required)
  4. General meeting approves (within 6 months)
  5. Accounts filed with RCS (within 7 months)

Audit Costs​

Cost Considerations​

Audit Costs:

  • Vary based on company size and complexity
  • Typically range from €2,000 to €20,000+ for SMEs
  • Larger companies pay more
  • Costs are tax-deductible business expenses

Cost Management​

Ways to Manage Costs:

  • Choose appropriate auditor
  • Prepare accounts well in advance
  • Maintain good accounting records
  • Respond promptly to auditor requests

Luxembourg Compliance Note​

Critical Requirements:

  • Size thresholds: Understand when audit is mandatory
  • Legal form: Know requirements for your legal form
  • Timing: Complete audit before filing deadline
  • Auditor qualification: Use certified auditor
  • Compliance: Ensure audit meets all requirements

Common Issues:

  • Threshold confusion: Not understanding when audit is required
  • Timing problems: Audit not completed in time
  • Cost concerns: Audit costs higher than expected
  • Auditor selection: Choosing inappropriate auditor
  • Preparation: Accounts not ready for audit

Think It Through​

Artisan Boulangerie is a Sàrl with balance sheet of €3,000,000, turnover of €7,000,000, and 35 employees. Is an audit required? What if their turnover increases to €9,000,000 next year?

Concepts in Practice​

Audit Requirement Example

TechLux Solutions (SA - public limited company):

Legal Form: SA (Société Anonyme) Size: Balance sheet €6,000,000, turnover €10,000,000, 60 employees

Audit Requirement:

  • Legal form: SA always requires audit ✅
  • Size: Also exceeds 2 of 3 criteria ✅
  • Result: Audit mandatory

Audit Process:

  1. Fiscal year ends: 31 December 2024
  2. Accounts prepared: January - March 2025
  3. Audit conducted: April - May 2025
  4. Audit report: Issued May 2025
  5. General meeting: Approves accounts June 2025
  6. Filing: Files with RCS July 2025

Cost: €8,000 (typical for company of this size)

Compliance: Audit completed on time, accounts filed with audit report.